Summary of Amendments to the Guidelines on Compliance Function for Fund Management Companies

Summary of Amendments to the Guidelines on Compliance Function for Fund Management Companies (Compliance Guidelines) (Revised: 9 May 2017) The following table provides a summary of amendments made to the Guidelines on Compliance Function for Fund Management Companies revised on 9 May 2017:
B. Specific amendments
No Reference in the Compliance Guidelines Comments Prior to 9 May 2017 Revised version dated 9 May 2017
1. Content Page
Chapter 11
PROPRIETARY TRADING
Content Page
Chapter 11
MANAGING CONFLICTS OF INTEREST
Renaming of Chapter to reflect requirements on managing conflicts of interest
2. Content Page
-
Content Page
Chapter 13
ADDITIONAL REQUIREMENTS
RELATING TO A DIGITAL
INVESTMENT MANAGEMENT
COMPANY
New chapter on additional requirements for a digital investment management company
3. Para 1.01 Para 1.01 Inclusion of the word ‘portfolio’ to clarify that these
Guidelines apply to portfolio fund management company only A. General amendments made throughout the Guidelines on Compliance Function for Fund Management
1. Editorial amendments including streamlining certain terminology to enhance clarity and ensure consistency.

B. Specific amendments
No Reference in the Compliance Guidelines Comments Prior to 9 May 2017 Revised version dated 9 May 2017
4. Para 1.04 Para 1.04 Inclusion of reference to Guidelines on Management
of Cyber Risk
5. Para 2.01
-
Para 2.01 compliance officer
Inclusion of the definition of ‘compliance officer’
6. Para 3.02, 11. Para 3.02, 11. Inclusion of the word ‘timely’ to clarify the
expectation in dealing with the SC
7. Para 4.02 (j) and (m) Para 4.02 (k) and (l) Renumbering of existing paragraphs
8. Para 4.02 (k) and (l) Para 4.02 (m) and (n) Renumbering of existing paragraph and redrafting to
provide clarity on the expected oversight of the Board
9. - Para 4.02 (j), (o) - (r) Inclusion of additional conduct provisions to enhance
accountability on the part of the Board
10. Para. 4.04 (n) Para 4.04 (n) Redrafting as reporting lines has been moved to
Board’s responsibilities section
11. - Para 4.04 (r) Reference made to Chapter 13 on the additional
responsibility of the Compliance Officer
12. Para 5.01 Para 5.01 Redrafting to provide clarity on the expected
oversight by the Board
13. Para 5.05 Para 5.05 Redrafting to provide clarity on the expected
oversight of the Board

B. Specific amendments
No Reference in the Compliance Guidelines Comments Prior to 9 May 2017 Revised version dated 9 May 2017
14. Para 5.02, 5.11 and 5.12 Para. 5.02, 5.11 and 5.12 Consequential amendments (Outsourcing Guidelines
requirements now contained in the Licensing Handbook)
15. Para. 5.10 Para 5.10 Redrafting to provide clarity on the expected
reporting of review and testing
16. Para 6.02 Para 6.02 (a) - (c) No substance change – formatting change to clarify
expectations on the frequency
17. Para 9.04 Para 9.04 Consequential amendments (reflect new guidelines)
18. Chapter 11
PROPRIETARY TRADING
Chapter 11
MANAGING CONFLICTS OF INTEREST
Renaming of Chapter and inclusion of new provisions to enhance conflict of interest requirements:
11.01 General
11.02 Conflicts of interest identification
11.04 Conflicts of interest management
11.06 Disclosure of conflicts of interest
19. Para 11.01 and 11.02 Para 11.08 and 11.09 Renumbering of existing paragraphs following
insertion of provisions on conflicts of interest
20. Para 6.12 – 6.14 Para 11.10 - 11.12 Renumbering of paragraphs relating to ‘Receipt or
provision of benefits’ and moved to Chapter 11 as
part of provisions on managing conflicts of interest

B. Specific amendments
No Reference in the Compliance Guidelines Comments Prior to 9 May 2017 Revised version dated 9 May 2017
21. Para 6.15 – 6.19 Para 11.13 - 11.17 Renumbering of paragraphs relating to ‘Rebates and
soft commission arrangements’ and moved to Chapter 11 as part of provisions on managing conflicts of interest
22. Para 9.13 – 9.17 Para 11.18 – 11.22 Renumbering of paragraphs relating to ‘Order
allocation’ and moved to Chapter 11 as part of provisions on managing conflicts of interest
23. Para 9.18 – 9.21 Para 11.23 – 11.26 Renumbering of paragraphs relating to ‘Best
execution’ and moved to Chapter 11 as part of provisions on managing conflicts of interest
24. Para 9.22 – 9.24 Para 11.27 – 11.29 Renumbering of paragraphs relating to ‘Cross trades’
and moved to Chapter 11 as part of provisions on managing conflicts of interest
25. Para 12.08 Para 12.08 Deletion of reference to keeping of phone recording
as it is already covered by the same paragraph.
26. - New Chapter 13
ADDITIONAL REQUIREMENTS
RELATING TO A DIGITAL INVESTMENT
MANAGEMENT COMPANY
New chapter to reflect additional requirements applicable to a fund management company carrying on the business as a digital investment management company:
1) Additional Board’s responsibilities
2) Clarification on compliance programme
4) Additional considerations to be included in the risk

B. Specific amendments
No Reference in the Compliance Guidelines Comments Prior to 9 May 2017 Revised version dated 9 May 2017 management framework
5) Disclosures to clients
6) Algorithm design and oversight